20071120Motion to approve settlement stipulation.pdf

RECENt
'sIDA~POR~
An IDACORP Company
Barton L.Kline
Senior Attorney
it: "'0
October 2, 2007
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P. O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-07-03
In the Matter of Idaho Power Company's Petition to Increase the
Published Rate Eligibility Cap for Wind Powered Small power
Production Facilities; and
To Eliminate the 90%/110% Penormance Band for Wind Powered
Small Power Production Facilties
Dear Ms. Jewell:
Please find enclosed for filng an original and seven (7) copies of Idaho Power and
Renewable Northwest Project and Northwest Energy Coalition's Joint Motion to Approve
Settlement Stipulation with attached Settlement Stipulation for the above-referenced
matter.
I would appreciate it if you would return a stamped copy of this transmittal letter in
the enclosed self-addressed, stamped envelope.
Very truly yours,
Barton L. Kline
BLK:sh
Enclosures
cc: Willam M. Eddie
P.O. Box 70 (B3707)
1221 W. Idaho St.
Boise, 10 83702
.
BARTON L. KLINE, ISB No. 1526
LISA D. NORDSTROM, ISB No. 5733
IDAHO POWER COMPANY
1221.West Idaho Street
P.O. Box 70
Boise, ID 83707
Tel: [phone]
Fax: [phone]
bkline~idahopower.com
Inordstrom~idahopower.com
Attorneys for Idaho Power Company
WILLIAM M. EDDIE
ADVOCATES FOR THE WEST
610 SW Alder Street, Suite 910
Portland, OR 97205
Tel: [phone]
Fax: [phone]
beddie~advocateswest.org
Attorneys for Renewable Northwest Project
and NW Energy Coalition
e
RECEiVE
2061 OCT - 2 PH it: itO
IDAHO PUBLIC ,
UTILITIES COMMISSIO;\
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S PETITION TO INCREASE
THE PUBLISHED RATE ELIGIBILITY CAP
FOR WIND POWERED SMALL POWER
PRODUCTION FACILITIES; and
TO ELIMINATE THE 90%/110%
PERFORMANCE BAND FOR WIND
POWERED SMALL POWER PRODUCTION
FACILITIES
)
)
) CASE NO. IPC-E-07-03
)
) JOINT MOTION TO APPROVE
) SETTLEMENT STIPULATION
)
)
)
)
)
COMES NOW, Idaho Power Company ("Idaho Powet' or the "Company") and
Renewable Northwest Project and Northwest Energy Coalition ("Renewable Coalition")
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -1
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hereinafter Party or collectively "Parties", and pursuant to RP 56 and 272 move the
Commission for an order approving the enclosed Settlement Stipulation dated October
2, 2007 ("Stipulation") which is identified as Attachment 1. In support of this Motion,
Idaho Power and Renewable Coalition respectfully state as follows:
Introduction and Background
1. On June 17, 2005, in Case No. i PC-E-05-22, Idaho Power filed a petition
with the Commission requesting a temporary suspension from the Company's obligation
under Sections 201 and 210 of the Public Utilty Regulatory Policies Act of 1978
("PURPA") and various Commission orders, to enter into new contracts to purchase
energy generated by wind powered Qualifying Facilties ("QFs"). Following a public
hearing and oral argument on August 4, 2005, the Commission entered Interlocutory
Order No. 29839. The Interlocutory Order did not approve a temporary suspension but,
instead, reduced the published rate eligibilty cap for intermittent QF wind projects from
10 average MW/month to 100 kW and required individual contract negotiations for wind
QFs larger than 100 kW. Order No. 29839 also established grandfathering criteria for
QF wind projects that were in various stages of negotiation with Idaho Power at the time
Order No. 29839 was issued.
2. On August 23, 2005 in Order No. 29872, the Commission designated
Interlocutory Order No. 29839 as final Order No. 29851 to allow parties to seek
reconsideration and appeal of the Interlocutory Order. Subsequently, Order No. 29872
denied the petitions and cross-petitions for reconsideration of final Order No. 29851 filed
by Windland Incorporated, Idaho Power and the Commission Staff and established the
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -2
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\
right of aggrieved parties to appeal all final and interlocutory orders previously issued in
Case No. IPC-E-05-22 to the Idaho Supreme Court. No appeals were filed.
3. In Interlocutory Order No. 29839 (Final Order No. 29851), the Commission
found that wind generation presents operational integration costs to a utilty different
from other PURPA qualified resources. (Order No. 29839 p. 8). The Commission also
found that the unique supply characteristics of wind generation and the related
integration costs provide a basis for adjustment of the published avoided cost rates, a
calculated figure that may be different for each utilty. (Order No. 29839 p. 8). In the
I PC-E-05-22 case, Idaho Power advised the Commission that it intended to perform a
study to quantify the additional costs it would incur directly related to purchasing a
significant amount of wind generation (''the wind integration study" or "the study"). The
Company further advised the Commission that, upon completion of the study, the
Company would provide it to the Commission for its consideration.
4. To assist Idaho Power in preparing the study, the Company retained the
services of EnerNex Corporation. EnerNex retained WindLogics, Inc. to assist by
developing the historical wind speed data set for the study. Both consultants are
acknowledged as experts in their respective fields, analysis and preparation of wind
integration studies (EnerNex) and atmospheric modeling and analysis (WindLogics).
Idaho Power distributed a peer review draft of the study to a number of entities that are
considering similar wind integration issues on a regional basis. These entities were
given the opportunity to provide the Company with a review of the methodology used in
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -3
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the peer review draft of this study.1 Based on comments received from the peer review
group and with further refinements performed by the Company, the methodology was
finalized and the final study prepared.
5. On February 6,2007, Idaho Power filed a Petition to initiate this case. In
its Petition the Company presented the final Wind Integration Study and requested that
the Commission issue its order establishing the following:
(a) Raising the cap on entitlement to published avoided cost rates for
intermittent wind powered from the current level of 100 kW to 10,000 average kWs per
month ("10 average MWs/mo" or "10 aMW"); and
(b) Reducing the published avoided cost rates applicable to intermittent wind
powered QFs to compensate for the increase in system costs due to wind variabilty.
The Company proposed new published avoided cost rates in its Petition; and
(c) Authorizing Idaho Power to purchase state-of-the-art wind forecasting
services that wil provide Idaho Power with forecasts of wind conditions in those
geographic areas in which wind generation resources are located. The Petition
requested that QFs reimburse the Company for their share of the on-going cost of the
wind forecasting service; and
(d) Authorizing the Company to include a "mechanical availability guarantee"
in all contracts with new intermittent wind powered QF resources. The mechanical
availabilty guarantee would require wind powered QFs to demonstrate monthly that,
except for scheduled maintenance and events of force majeure, the QF wind project
1The peer review participants were Avista, SPA, Grant County PUD, National Renewable Energy
Laboratory, NorthWestern Energy, Oak Ridge National Laboratory, PacifiCorp, Puget Sound Energy,
Renewable Northwest Project, Seattle City Light, and two independent consultants.
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -4
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was physically capable and available to generate at full output during 85% of the hours
in the month.
(e) Finally, the Petition requested that if the Commission ordered the changes
to the published rates, authorized the acquisition and funding of the wind forecasting
services and authorized the inclusion of mechanical availability guarantees in future
contracts for purchases of energy from intermittent wind powered QFs, Idaho Power
proposed that the Commission remove the requirement that the 90%/110%
performance band be included in new contracts for energy purchases from intermittent
wind powered QFs.
6. By Notice dated February 16, 2007 the Commission acknowledged Idaho
Powets intention to schedule and conduct at least one workshop in which its Petition
and the Wind Integration Study would be discussed.
7. Two workshops were held on March 15,2007 and June 20,2007. During
the workshop process, participants suggested changes to a number of the assumptions
utilzed in the study to determine Idaho Powets cost of integrating intermittent wind
resources. Idaho Power looked at each of those assumptions individually. Several of
the suggestions made by the participants in the workshops were accepted by the
Company, the bulk of those changed assumptions had a relatively minor effect on the
wind integration cost. However, during the course of the analysis, Idaho Power
discovered two components of its model that needed adjustment. The sum total of the
adjustments Idaho Power discovered and the adjustments coming as a result of
suggested changes by workshop participants resulted in a revised estimate of the
current cost of integrating up to 600 MW of wind on its system to $7.92 per MWh.
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -5
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8. Subsequently, on July 31, and August 10, 2007, Commission Staff
sponsored joint settlement workshops in Case Nos. IPC-E-07-03 (Idaho Power), PAC-
E-07 -07 (PacifiCorp) and AVE-E-07 -02 (Avista) to explore whether parties of record
could agree to a common generic wind integration adjustment to published rates.
9. Participants in the joint settlement workshops were unable to reach a
compromise generic agreement. However, as a direct result of those joint settlement
discussions, additional informal discussions regarding settlement have continued.
10. The result of those informal settlement discussions is a Settlement
Stipulation which is presented with this Petition.
Settlement Provisions
11. The Stipulation, Attachment 1, has several features which are explained in
more detail as follows:
12. Integration Charge. As noted in paragraph 7 above, Idaho Powets study
concluded that it would incur integration costs of $7.92 for up to 600 MWof wind.
However, there is general consensus among those that study the issue that wind
integration cost increases with the amount of wind resources that are interconnected
with the Company's system. To address that effect, in the Stipulation the Parties
agreed to three tiers of wind integration charges based on increasing levels of wind
development. The Parties also agreed to cap the wind integration charge at $6.50 per
MWh.
Tier 1
Tier 2
Tier 3
Amount of wind online
Oto300 MW
301 to 500 MW
501 MW and above
Integration charge (cap)
7% ($6.50 per MWh)
8% ($6.50 per MWh)
9% ($6.50 per MWh)
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -6
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13. In its Initial Petition Idaho Power proposed a single dollar per MWh
reduction in avoided costs in the amount of $10.72 per MWh for the first 600 MWs of
wind on its system. In the Stipulation the Parties have agreed to compute the
integration charge as a percentage of the applicable avoided cost rate published rather
than a single fixed dollar per MWh charge. By setting the integration charge as a
percentage of avoided cost rates, the integration charge wil automatically adjust as
avoided cost rates go up or down. This presents a more transparent link to avoided
cost rates and to some extent underscores the general recognition that wind integration
costs are, to some extent, linked to market prices for power.
The integration charge for each Wind QF project wil be calculated at the time a
Wind QF project achieves its Operation Date as that term is defined in the Firm Energy
Sales Agreement ("FESA") between the Company and the Wind QF. The integration
charge wil be calculated as a percentage (7%, 8% or 9%) of the current 20-year,
levelized, avoided cost rate, subject to a cap of $6.50/MWh. The integration charge as
calculated on the Operation Date wil remain fixed throughout the term of the contract
and wil be applied as a decrement to the applicable published rate
14. As noted in the Stipulation, the term "amount of wind online" means the
cumulative amount of installed megawatts of wind generation capable of delivering
energy in real time to Idaho Powets system on the date when a Wind QF achieves its
Operation Date as that term is defined in the Firm Energy Sales Agreement ("FESA")
between the Company and the Wind QF. However, the Stipulation recognizes that
there are currently 247 MWs of approved FESAs with Wind QFs that have yet to come
on-line. FESAs with Wind QFs which have been approved by the Commission as of the
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -7
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date of this Stipulation wil count toward the cumulative "amount of wind online" for as
long as such FESAs are in effect.
15. The term "applicable published rate" means the applicable avoided cost
rate approved by the Idaho PUC for purchases of power from QFs producing less than
1 OaMW, for the relevant contract year and time period of energy generation.
16. Assumptions and Reasonableness. Converting the integration charge
based on a percentage of the applicable published rate to a fixed dollar amount requires
assumptions regarding the published avoided cost rates. The following chart shows the
integration charge for each tier for a range of published avoided cost rates.
¡ $6.50
!
¡
l2 $6.00
~(,
"CCD"C
.~ $5.50ce
~
"CCD
g $5.00
ãlQë:io
~ $4.50
Proposed Wind Integration Charge Based on Avoided Cost Rates
$7.00
$4.00
o 50 100 150 200 250 300 350 400 45 500 550 600 650 700 750
Nameplate Wind Generation (MW)
- Current SAR Methodology w/updated NG Forecast (2o-year levelized rate of $73.22 based on 2008 on-line date)
-IPC Proposed Revision to SAR Methodology (2o-year levelized rate of $68.15 based on 2008 on-line date)
- Current Avoided Cost Rates (2o-year levelized rate of $63.84 based on 2008 on-line date)
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -8
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Idaho Power is cognizant that all of the above-referenced integration charges
including the $6.50 cap are less than the $7.92 per MWh revised integration estimate.
The Parties agree that the basic methodology Idaho Power used to prepare the wind
integration study is sound. However, as is always the case with computer modeling, the
devil is in the assumptions. The science of wind integration cost modeling is in its
infancy. While wind integration cost modeling is a valid way to estimate wind integration
costs, the Parties acknowledge agrees that a reasonable period of experience is
required in which utilities wil have an opportunity to operate their systems with
statistically significant amounts of wind generation on the system before the output of
the models can be fully validated.
It is the Parties' position that the integration charges set out in the Stipulation are
reasonable at the current time. As experience is gained, the integration charge could
go up or it could go down. Idaho Power believes that both the $7.92 per MWh amount
determined by the revised Study and the amounts set out in the Stipulation are within
reasonable rages of estimates of the Company's costs of integrating wind resources.
Renewable Coalition has filed testimony in support of the Stipulation in which it explains
why it believes the $7.92 per MWh amount is too high. Time wil tell whether or not the
rates in the Settlement should be increased or decreased. If the best available scientific
data and the Company's experience demonstrates that the percentage integration
charge and the $6.50 cap on the integration charge should be increased or decreased,
the Company wil include that information in its integrated resource planning process
and present those results to the Commission.
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -9
..
Finally, the Parties believe that the integration charge contained in the Stipulation
wil provide long-term stability for QF development and wil provide flexibilty to protect
customers from published rates that are too high.
17. Elimination of the 90%/110% Performance Band Mechanical
Availabilty Guarantee. In the Stipulation the Parties have agreed that inclusion of the
"90%/110%" performance band approved by the Commission in Order No. 29632 will be
eliminated from the template Firm Energy Sales Agreement for future Wind QFs. The
90%/110% performance band wil be replaced in future FESAs by the integration charge
described in paragraph 12 above, a mechanical availabilty guarantee as described in
Idaho Powets Petition in this case, and a wind forecasting charge as described in
paragraph 20 below. QFs currently holding approved FESAs which include the
90%/110% performance band can elect to amend their existing FESAs to replace the
90%/110% performance band with the mechanical availabilty guaranty but if they make
that election, they will be subject to the wind integration charge and wind forecasting
charge in effect when their wind QF project achieves its Operation Date.
18. Amendment to the Study. In the Stipulation the Parties have agreed that
no later than October 31,2007, Idaho Power wil publish an amendment to the Study to
reflect the additional analyses presented by the Company in the public workshops held
in IPC-E-07 -03. Idaho Power will file the Amendment with the Commission and make
the amendment publicly available on Company websites and in other appropriate
venues.
19. On-aoing Review of Wind Integration Costs. In the Stipulation, the
Parties have agreed that Idaho Power wil continue to review its wind integration study
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -10
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and update its study to include the results of available scientific data and actual
operating experience. In the Stipulation the Parties set out the general framework for
that continued review. This framework is as follows:
(a) Idaho Power wil convene an informal wind integration cost working group
which wil meet at least two times during 2008 to discuss Idaho Powets wind integration
study and new data related to wind integration costs.
(b) Idaho Power wil review its expected cost of wind integration in light of the
best available scientific data and actual operating experience. Expected wind
integration cost information wil be included in the Company's integrated resource
planning ("IRP") process in the same way that costs for other generating resources are
included in the IRP.
20. Wind Energy Production Forecasting. During the workshops
undertaken in this case, a lot of time and effort was devoted to trying to understand how
the use of state-of-the-art wind energy production forecasting could be used to reduce
the cost of integrating intermittent wind resources on Idaho Powets system. There
seems to be general consensus that wind energy production forecasting wil be useful in
achieving that goal. To that end, in the Stipulation the Parties have agreed that Idaho
Power wil contract with a nationally recognized wind energy production forecasting
vendor to produce a wind energy production forecast for Idaho Power's service area.
The cost of this wind energy production forecasting wil be allocated to all Wind QFs
signing new FESAs with Idaho Power on a uniform per MW basis. The cost of wind
forecasting attributable to an individual Wind QF wil be shared equally between Idaho
Power and the Wind QF, with an annual cap on the Wind QFs maximum liabilty for
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -11
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such costs set at 0.1 % of the total energy payments Idaho Power made to the Wind QF
under the applicable FESA during the previous Contract Year. During the first Contract
Year, the cap wil be set at 0.1 % of the Wind QFs total energy payments for the first
Contract Year. As this cap wil not be known until the first Contract Year is complete,
Idaho Power will deduct the Wind QFs calculated share each month during the first year
and subsequently refund any overpayment (payments that exceed the cap) in equal
monthly amounts over the ensuing Contract year. Idaho Power wil consult with Wind
QFs in setting up the protocols for the wind energy forecasting program. It is Idaho
Power's intent that the wind energy forecasting program be practical and cost effective.
Conclusion
Idaho Power and Renewable Coalition request that the Commission process this
Motion by modified procedure in accordance with RP 201 et seq.
For the reasons cited herein, Idaho Power and Renewable Coalition respectfully
submit that the Stipulation is in the public interest and hereby jointly request that, after
appropriate review, the Commission enter its Order (1) approving the Stipulation; and
(2) authorizing Idaho Power to enter into new contracts with existing and future wind
QFs utilzing the charges, terms and conditions contained in the Stipulation.
Respectully submitted this 2 ~ day of October, 2007.
IDAHO POWER COMPANY
(k12L
BARTON L. KLINE
Attorney
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -12
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,)..
Respectfully submitted this~ day of October 2007.
e
RENEWABLE NORTHWEST PROJECT
AND NW ENERGY COALITION
WILLIAM M. EDDIE
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -13
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CERTIFICATE OF SERVICE
I hereby certify that on the ~ day of June 2007, I caused to be served, via the
method(s) indicated below, true and correct copies of the foregoing document, upon:
Commission Staff
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
.lHand Delivered
U.S. Mail
_ Overnight Mail
FAX
-X Email scott.woodbury((puc.idaho.gov
Exergy Development Group of Idaho
Peter J. Richardson, Esq.
Richardson & O'Leary
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Hand Delivered
-LU.S.Mail
_ Overnight Mail
FAX
i Email
petercærichardsonandoleary.com
Don Reading
Ben Johnson Associates
6070 Hil Road
Boise, Idaho 83702
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-LU.S.Mail
_ Overnight Mail
FAX
i Email dreadingcæmindspring.com
Renewable Northwest Project and
NW Energy Coalition
Willam M. Eddie
Advocates for the West
610 SW Alder Street, Suite 910
Portland, OR 97205
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-LU.S.Mail
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i Email beddiecæadvocateswest.org
Natalie Mcintire
Renewable Northwest Project
917 SW Oak Street, Suite 303
Portland, OR 97205
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FAX
Email
Ridgeline Energy, LLC
Rich Rayhil
720 W. Idaho, Suite 39
Boise, Idaho 83702
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--U.S. Mail
_ Overnight Mail
FAX
i Email rrayhilicærl-en.com
Hand Delivered
-LU.S.Mail
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -14
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Robert M. Ells, Esq.
4 Nickerson, Suite 301
Seattle, WA 98109
_ Overnight Mail
FAX
.- Email rellstCrI-en.com
Blue Ribbon Energy LLC
M.J. Humpries
Blue Ribbon Energy LLC
2630 Central Ave.
Idaho Falls, Idaho 83406
Hand Delivered
-LU.S. Mail
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FAX
.- Email blueribbonenergytCgmail.com
Avista
R. Blair Strong
Jerr K. Boyd
Paine Hamblen, LLP
717 W. Sprague, Suite 1200
Spokane, VV A 99220
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FAX
.- Email r.blair.strong~painehamblen.com
Michael G. Andrea
Avista Corpration
1411 East Mission Ave., MSC-23
Spokane, QA 99202
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-LU.S. Mail
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FAX
.- Email Michaei.andrea~avistacorp.com
Cassia Gulch Wind Park LLC
Cassia Wind Farms LLC
Dean J. Miler
McDevitt & Miler, LLP
P.O. Box 2564
Boise, Idaho 83701
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_ Overnight Mail
FAX
.- Email joetCmcdevitt-miler.com
Ronald K. Arrington
Associate Chief Counsel
John Deere Renewables, LLC
6400 NW 86th Street
P.O. Box 6600
Johnston, IA 50131
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_ Overnight Mail
FAX
Email
Idaho Windfarms LLC
Glenn Ikemoto
Authorized Manager
Idaho Windfarms, LLC
672 Blair Ave.
Piedmont, CA 94611
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-LU.S. Mail
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FAX
.- Email glennitCpacbell.net
JOINT MOTION TO APPROVE SEnLEMENT STIPULATION -15
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Snake River Alliance
Ken Miler
Clean Energy Program Director
Snake River Allance
P.O. Box 1731
Boise, Idaho 83701
Renaissance Engineering & Design
Brian D. Jackson
Renaissance Engineering
& Design, PLLC
2792 Desert Wind Road
Oasis, Idaho 83647-5020
Gerald Fleischman
Gerald Fleischman
11535 W. Hazedale Ct.
Boise, Idaho 83713
INL
Gary D. Seifert, P.E.
Kurt Myers, P.E.
INL
2525 S. Fremont Ave.
P.O. Box 1625, MS 3810
Idaho Falls, Idaho 83415
e
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i Email kmileræÐsnakeriverallance.org
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i Email brianæÐclever-ideas.com
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..U.S. Mail
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i Email gfleisch986æÐhotmail.com
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i Email gary.seifert((inl.gov
Kurt.myers((inl.gov~
Barton L. Kline
JOINT MOTION TO APPROVE SETTLEMENT STIPULATION -16
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BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-07-03
IDAHO POWER COMPANY
ATTACHMENT 1
e
BARTON L. KLlNE,ISB No. 1526
LISA D. NORDSTROM, ISB No. 5733
IDAHO POWER COMPANY
1221 West Idaho Street
P.O. Box 70
Boise, I D 83707
Tel: [phone]
Fax: [phone]
bkline ~ idahopower.com
Inordstrom ~ idahopower.com
Attorneys for Idaho Power Company
WILLIAM M. EDDIE
ADVOCATES FOR THE WEST
610 SW Alder Street, Suite 910
Portland, OR 97205
Tel: [phone]
Fax: [phone]
beddie ~ advocateswest.org
Attorneys for Renewable Northwest Project
and NW Energy Coalition
e
RECEfV~::
ZUU1 OCT -2 PM 4= 52
IDAHO PUBLIC
UTILITIES COMMISSION
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S PETITION TO INCREASE
THE PUBLISHED RATE ELIGIBILITY CAP
FOR WIND POWERED SMALL POWER
PRODUCTION FACILITIES; and
TO ELIMINATE THE 90%/110%
PERFORMANCE BAND FOR WIND
POWERED SMALL POWER PRODUCTION
FACILITIES
)
)
) CASE NO. IPC-E-07-03
)
) SETTLEMENT STIPULATION
)
)
)
)
)
)
1. This Settlement Stipulation ("Stipulation") is entered into by and among
Idaho Power Company ("Idaho Powet' or "the Company"), Renewable Northwest
SETTLEMENT STIPULATION-1
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Project and NW Energy Coalition ("Northwest Coalition) and the other signatories to this
Stipulation, all of which are individually referred to as "Party" or collectively referred to
as, the "Parties".
I. INTRODUCTION
2. The Parties agree this Stipulation represents a fair, just and reasonable
compromise of the issues raised in this proceeding and this Stipulation is in the public
interest. The Parties believe that the Stipulation and its acceptance by the Idaho Public
Utilities Commission ("I PUC" or "the Commission"), represents a reasonable resolution
of the issues identified in this maUer. The Parties, therefore, recommend that the
Commission, in accordance with Rule of Procedure (RP) 274, approve the Stipulation
and all of its terms and conditions without material change or condition.
II. BACKGROUND
3. In Case No. IPC-E-05-22, the Commission endeavored to properly
determine the appropriate pricing of intermittent generation purchased from Qualified
Faciliies ("QFs") pursuant to Section 201 and 210 of the Public Utility Regulatory
Policies Act of 1978 ("PURPA") and ascertain whether any related utility integration
costs were fully reflected in the published avoided cost rates. Pending this
determination, the Commission issued Order No. 29839 in August 2005 reducing the
published rate eligibilty cap for intermittent QFs using wind as the motive force ("Wind
QFs") from 1 0 average MW per month to 100 kW and required individual contract
negotiations for Wind QFs larger than 100 kW.
Idaho Power subsequently performed a study to quantify the additional costs it
would incur directly related to purchasing a significant amount of wind generation ("Wind
SETTLEMENT STIPULATION-2
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Integration Study" or "Study"). In February 2007 Idaho Power filed the Study with the
Commission, together with the Petition that initiated this docket proposing a
$10.72/MWh integration adjustment to published avoided cost rates that was
substantiated by the Study. In addition, the Company's Petition requested that the
Commission issue an order:
A. Raising the cap on entitlement to published avoided cost rates for
intermittent Wind QFs from the current level of 100 kW to 10,000 average kWs per
month ("10 average MWs/mo" or "10 aMW"); and
B. Reducing the published avoided cost rates applicable to intermittent Wind
QFs to compensate for the increase in system costs due to wind variability as
requested; and
C. Authorizing Idaho Power to purchase state-of-the-art wind energy
production forecasting services that wil provide Idaho Power with forecasts of wind
conditions in those geographic areas in which Wind QFs are located. The Petition
requested that the order further provide that Wind QFs reimburse the Company for their
share of the on-going cost of the wind forecasting service; and
D. Authorizing the Company to include a "mechanical availability guarantee"
("MAG") in all contracts with new intermittent Wind QFs. The MAG would require
intermittent Wind QFs to demonstrate monthly that, except for scheduled maintenance
and events of force majeure, the Wind QF project was physically capable and available
to generate at full output during 85% of the hours in the month; and
E. If the Commission orders the requested changes to the published rates,
authorizes the acquisition and funding of the wind forecasting services and authorizes
SETLEMENT STIPULATION-3
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the inclusion of mechanical availability guarantees in future contracts for purchases of
energy from intermittent Wind QFs, Idaho Power proposed that the Commission remove
the requirement that the 90%/110% performance band be included in new contracts for
energy purchases from intermittent Wind QFs.
Interested parties participated in multiple workshops and settlement discussions
in both the IPC-E-05-22 and IPC-E-07-03 dockets.
As a result of those workshops and settlement discussions, as a compromise of
the positions of the Parties to this case, and for other consideration as set forth below,
the Parties agree to the following terms:
3. Terms of the Stipulation.
(a.) Idaho Power's published avoided cost rates for Wind QFs wil be
adjusted to recognize an assumed cost of integrating the energy generated by Wind
QFs as a part of the Company's generating resource portolio. The rate adjustment wil
be applied in three tiers, increasing as the total amount of wind integrated onto Idaho
Power's system grows. The integration charge for each Wind QF project wil be
calculated at the time a Wind QF project achieves its Operation Date as that term is
defined in the Firm Energy Sales Agreement ("FESA") between the Company and the
Wind QF. The integration charge wil be calculated as a percentage (7%, 8% or 9%) of
the current 20-year, levelized, avoided cost rate, subject to a cap of $6.50/MWh. The
integration charge as calculated on the Operation Date wil remain fixed throughout the
term of the contract and will be applied as a decrement to the applicable published rate
according to the table below:
SETTLEMENT STIPULATION-4
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Tier 1
Tier 2
Tier 3
Amount of wind online
Ot0300 MW
301 to 500 MW
501 MW and above
Integration charge (cap)
7% ($6.50/MWh)
8% ($6.50/MWh)
9% ($6.50/MWh)
In this Stipulation, the term "amount of wind online" means the cumulative
amount of installed megawatts of wind generation capable of delivering energy in real
time to Idaho Power's system on the date when a Wind OF achieves its Operation Date.
Provided however that FESAs with Wind QFs which have been approved by the
Commission as of the date of this Stipulation wil count toward the cumulative "amount
of wind online" for as long as such FESAs are in effect. If the generating capacity
associated with a Wind QF causes the amount of wind online to exceed 300 MW or to
exceed 500 MW, such Wind QF will be subject to the applicable integration cost for Tier
2 or Tier 3, respectively.
The term "applicable published rate" means the applicable avoided cost rate
approved by the Idaho PUC for purchases of power from QFs producing less than
1 OaMW, for the relevant contract year and time period of energy generation.
(b.) The "90%/110%" performance band approved by the Commission
in Order No. 29632 will be eliminated from the template Firm Energy Sales Agreement
for future Wind QFs. The 90%/110% performance band wil be replaced in future
FESAs by the integration charge described in paragraph 3(a) above, a mechanical
availability guarantee as described in Idaho Powets Petition in this case, IPC-E-07-03
and a wind forecasting charge as described in paragraph 3(f) below. QFs currently
holding approved FESAs which include the 90%/110% performance band can elect to
amend their existing FESAs to replace the 90%/110% performance band with the
mechanical availability guarantee but if they make that election, they wil be subject to
SETTLEMENT STIPULATION-5
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the wind integration charge and wind forecasting charge in effect when their wind QF
project achieves its Operation Date.
(c.) No later than October 31, 2007, Idaho Power will publish an
amendment to the Study to reflect the additional analyses presented by the Company in
the public workshops held in IPC-E-07-03. Idaho Power wil make such amendment
publicly available on Company websites and in other appropriate venues.
(d.) Idaho Power wil convene an informal wind integration cost working
group which will meet at least two times during 2008 to discuss Idaho Power's wind
integration study and new data related to wind integration costs.
(e.) Idaho Power wil review its expected cost of wind integration in light
of the best available scientific data and actual operating experience. Expected wind
integration cost information wil be included in the Company's integrated resource
planning ("lAP") process in the same way that costs for other generating resources are
included in the IRP.
(f.) Idaho Power wil contract with a nationally recognized wind energy
production forecasting vendor to produce a wind energy production forecast for Idaho
Power's service area. The cost of this wind energy production forecasting wil be
allocated to all Wind QFs holding FESAs with Idaho Power on a uniform per MW basis.
The cost attributable to an individual Wind QF will be shared equally between Idaho
Power and the Wind QF, with an annual cap on the Wind QFs maximum liabilty for
such costs set at 0.1 % of the total energy payments Idaho Power made to the Wind QF
under the applicable FESA during the previous Contract Year. During the first Contract
Year, the cap wil be set at 0.1 % of the Wind QFs total energy payments for the first
SETTLEMENT STIPULATION-6
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Contract Year. As this cap wil not be known until the first Contract Year is complete,
Idaho Power will deduct the Wind QFs calculated share each month during the first year
and subsequently refund any overpayment (payments that exceed the cap) in equal
monthly amounts over the ensuing Contract Year. Idaho Power wil consult with Wind
QFs in setting up the protocols for the wind energy forecasting program. It is Idaho
Power's intent that the wind energy forecasting program be practical and cost effective.
4. Reasonable Compromise: The Parties agree that this Stipulation
represents a compromise of the positions of the Parties in this case. As provided in RP
272, other than any testimony filed in support of the approval of this Stipulation, and
except to the extent necessary for a Party to explain before the Commission its own
statements and positions with respect to this Stipulation, all statements made and
positions taken in negotiations relating to this Stipulation shall be confidential and wil
not be admissible in evidence in this or any other proceeding.
5. Best Efforts for Approval: The Parties submit this Stipulation to the
Commission and recommend approval in its entirety pursuant to RP 274. The Parties
shall support this Stipulation before the Commission and no Part shall appeal a
Commission Order approving this Stipulation or an issue resolved by this Stipulation. If
this Stipulation is challenged by any person not a party to this Stipulation, the Parties to
this Stipulation reserve the right to fie testimony, cross-examine witnesses and put on
such case as they deem appropriate to respond fully to the issues presented, including
the right to raise issues that are incorporated in the settlements embodied in this
Stipulation. Notwithstanding this reservation of rights, the Parties to this Stipulation
SETTLEMENT STIPULATION -7
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agree that they wil continue to support the Commission's adoption of the terms of this
Stipulation.
6. Right to Withdraw: If the Commission rejects any part or all of this
Stipulation, or imposes any additional material conditions on approval of this Stipulation,
each Part reserves the right, upon written notice to the Commission and the other
Parties to this proceeding, within 7 days of the date of such action by the Commission,
to withdraw from this Stipulation, and each Party shall be entitled to seek
reconsideration of the Commission's Order, file testimony as it chooses, cross-examine
witnesses, and do all other things necessary to put on such case as it deems
appropriate. In such case, the Parties immediately will request the prompt convening of
a prehearing conference for purposes of establishing a procedural schedule for the
completion of the case. The Parties agree to cooperate in development of a schedule
that concludes the proceeding on the earliest possible date, taking into account the
needs of the Parties in participating in hearings and preparing briefs.
7. Public Interest: The Parties agree that this Stipulation is in the public
interest and that all of its terms and conditions are fair, just and reasonable.
8. Commission Approval: The obligations of the Parties under this
Stipulation are subject to the Commission's approval of this Stipulation in accordance
with its terms and conditions.
9. Counterparts: This Stipulation may be executed in counterparts and
each signed counterpart shall constitute an original document.
SETTLEMENT STIPULATION-8
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~
Respectfully submitted this 2. day of October 2007.
IDAHO POWER COMPANY
QttiBARTON L. KLINE
Attorney
SETTLEMENT STIPULATION-9
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f ~
Respectfully submitted this L day of October 2007.
RENEWABLE NORTHWEST PROJECT
AND ERGY COALITION
WILLIAM M. EDDIE
SETILEMENT STIPULATION -10
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Re submi th Z- da of OC 2007.
IDA WlNOFARS, LLC~.¿( (
· z~/1 =zGLNIKE~OAuor Maag
..
/
SETLEENT STIPULATION
r-
Respectfully sM!~~Cl't!li's3L day of October 2007.
2001 NOV 20 Al1 9:1 0
SETTLEMENT STIPULATION
SNAKE RIVER ALLIANCE
~?0~
KEN MILLER
Clean Energy Program Director
~e
CERTIFICATE OF SERVICE
I hereby certify that on the a-..t day of October 2007, I caused to be served, via
the method(s) indicated below, true and correct copies of the foregoing document,
upon:
Commission Staff
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 W. Washington (83702)
P.O. Box 83720
Boise, Idaho 83720-0074
~Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-- Email scott.woodbury(gpuc.idaho.gov
Exergy Development Group of Idaho
Peter J. Richardson, Esq.
Richardson & O'Leary
515 N. 2ih Street
P.O. Box 7218
Boise, Idaho 83702
Hand Delivered
-LU.S. Mail
_ Overnight Mail
FAX
.. Email
peter (g richardsonandoleary .com
Don Reading
Ben Johnson Associates
6070 Hil Road
Boise, Idaho 83702
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-L U.S. Mail
_ Overnight Mail
FAX
.. Email dreading(gmindspring.com
Renewable Northwest Project and
NW Energy Coalition
Wiliam M. Eddie
Advocates for the West
610 SW Alder Street, Suite 910
Portland, OR 97205
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.. Email beddie (g advocateswest.org
Natalie Mcintire
Renewable Northwest Project
917 SW Oak Street, Suite 303
Portland, OR 97205
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Email
Ridgeline Energy, LLC
Rich Rayhill
720 W. Idaho, Suite 39
Boise, Idaho 83702
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-LU.S. Mail
_ Overnight Mail
FAX
X Email rrayhill(grl-en.com
SETTLEMENT STIPULATION -11
~e
Robert M. Ells, Esq.
4 Nickerson, Suite 301
Seattle, WA 98109
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-lU.S. Mail
_ Overnight Mail
FAX
X Email rells(§rl-en.com
Blue Ribbon Energy LLC
M.J. Humpries
Blue Ribbon Energy LLC
2630 Central Ave.
Idaho Falls, Idaho 83406
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FAX
.. Email blueribbonenergy(§gmail.com
Avista
R. Blair Strong
JerryK Boyd
Paine Hamblen, LLP
717 W. Sprague, Suite 1200
Spokane, VVA 99220
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FAX
X Email r.blair.strong~painehamblen.com
Michael G. Andrea
Avista Corporation
1411 East Mission Ave., MSC-23
Spokane, QA 99202
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FAX
.. Email Michael.andrea~avistacorp.com
Cassia Gulch Wind Park LLC
Cassia Wind Farms LLC
Dean J. Miller
McDevitt & Miller, LLP
P.O. Box 2564
Boise, Idaho 83701
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.. Email joe(§mcdevitt-miller.com
Ronald K. Arrington
Associate Chief Counsel
John Deere Renewables, LLC
6400 NW 86th Street
P.O. Box 6600
Johnston, IA 50131
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Email
Idaho Windfarms LLC
Glenn Ikemoto
Authorized Manager
Idaho Windfarms, LLC
672 Blair Ave.
Piedmont, CA 94611
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FAX
.. Email glenni(§pacbell.net
SETTLEMENT STIPULATION -12
-
Snake River Allance
Ken Miler
Clean Energy Program Director
Snake River Alliance
P.O. Box 1731
Boise, Idaho 83701
Renaissance Engineering & Design
Brian D. Jackson
Renaissance Engineering
& Design, PLLC
2792 Desert Wind Road
Oasis, Idaho 83647-5020
Gerald Fleischman
Gerald Fleischman
11535 W. Hazedale Ct.
Boise, Idaho 83713
INL
Gary D. Seifert, P.E.
Kurt Myers, P.E.
INL
2525 S. Fremont Ave.
P.O. Box 1625, MS 3810
Idaho Falls, Idaho 83415
SETTLEMENT STIPULATION -13
e
Hand Delivered
-LU.S.Mail
_ Overnight Mail
FAX
X Email kmiller(Ç snakeriverallance.org
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-LU.S.Mail
_ Overnight Mail
FAX
i Email brian(Çclever-ideas.com
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-LU.S.Mail
_ Overnight Mail
FAX
i Email gfleisch986(Çhotmail.com
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FAX
i Email gary.seifert(Çinl.gov
Kurt. myers (Ç inl.gov
QttLBarton L. Kline